Within the manufacturing industry, precision engineering plays an important role by providing high-precision components, parts, and systems to many industries that enable systems and processes to function with greater accuracy, efficiency, and reliability.
One company that has a long presence in this cluster is GSS Energy (SGX Code: 41F), which has been listed on the Singapore Exchange since February 1993. Founded in 1979 as Giken Sakata Limited, the company primarily serves tier 1 clients from the consumer electronics, automotive, medical, and gaming industries under its precision engineering businesses arm. It also has a non-operational interest through its oil and gas business arm, which engages in low-risk and low-cost onshore oil and gas exploration in Indonesia. Recently, with the aim of diversifying its business, it entered the electric 2-wheeler business to ride the growth in the electric vehicle and e-mobility markets by launching the first electric motorcycle, the UNO-X, under the historic Italian Iso brand in partnership with Ferruccio Lamborghini (The Lamborghini Family).
The board is steadfast in its aim to deliver value to shareholders’ while ensuring sustainability-related risks are addressed by factoring them into its strategic formulation. Here are five ESG efforts undertaken by GSS Energy if you’re interested in the precision engineering industry.
Has the Group’s commitment to ESG influenced its bottomline or competitiveness? If so, what are some of the biggest challenges the Group sees in its commitment to ESG?
ESG integration promotes innovation, generates value, and helps companies gain a competitive advantage. GSS Energy’s focus on ESG has led to the development of new business ventures such as its electric vehicle sector, as well as forge new strategic partnerships. The Group’s commitment to ESG have attracted investors who prioritize sustainable investments, potentially enhancing its access to capital.
However, the Group also faces challenges in its ESG commitment. The energy sector faces the challenge of transitioning to a more sustainable and carbon-neutral future while meeting the increasing demands for energy. Also, GSS Energy’s ESG commitment requires ongoing monitoring and reporting of environmental impacts, energy management practices, which can be resource-intensive.
By addressing these challenges and capitalising on the advantages of its ESG commitment, GSS Energy aspires to generate long-term value for its stakeholders while contributing to a more sustainable future.
ESG relates to Environment, Social, and Governance. Which of these three pillars does the Group focus more on and why?
GSS Energy’s evident dedication to sustainability is best seen in their comprehensive ESG (Environment, Social, and Governance) strategy. Among the three pillars, the company clearly leans more towards the ‘Environment’. Their focus is backed by the belief in the essentiality of proactive environmental stewardship in today’s industrial realm. Notably, their dedication to quality, as reflected in their intent to minimize product reject rates, aligns with their aim to reduce waste. The company’s water conservation efforts, manifesting in a significant decrease in consumption, alongside their impactful endeavors in energy conservation – especially the installation of solar panels in their China subsidiary – are testaments to their environmental commitment.
GSS Energy’s investment in the electric vehicle (EV) sector further underscores their forward-thinking approach, recognizing the pivotal role EVs play in shaping a sustainable future. Their state-of-the-art wastewater treatment practices further highlight their efforts to harmonize industrial progress with environmental protection.
How has the Electric-Vehicles (EVs) segment changed the industry and operations for GSS Energy?
In recent years, we have expanded into the electric vehicles (EVs) segment with electric motorcycles manufactured by subsidiary Giken Mobility. This has reshaped the industry dynamics for GSS Energy, aligning with the global transition towards environmentally friendlier modes of transportation, and positioning the Group at the forefront of sustainable solutions.
Operationally, the EV foray has introduced significant changes for GSS Energy, including the shift towards sourcing materials such as tyres, motors, batteries, and other specialised spare parts, aside from primarily sourced materials (e.g. rubber, steel, carbon). This has led to new strategic partnerships and the potential adaptation of existing ones with partners.
Furthermore, GSS Energy’s customer demographic has expanded. Beyond the traditional precision engineering clientele, we now cater to individual and corporate customers keen on sustainable transportation options, allowing the business to diversify and expand revenue streams.
Lastly, the expansion into the EV sector has allowed GSS Energy to venture into a new segment – battery packing. With the establishment of a battery packing line in Batam specifically for electric motorcycles, we have further diversified our product offerings, enabling the Group to play a crucial role in the electrification of transportation.
How is the board committee involved in ensuring sustainability goals are met?
The Board serves as the strategic anchor, advises and oversees the development of the Group’s sustainability strategy, which is spearheaded by the Sustainability Committee which includes senior management from various support units led by the Chief Financial Officer. Three main focuses for the Group are:
Strategic Formulation – The Board is at the helm of the Group’s long-term strategic direction, integrating sustainability issues directly into the strategic formulation, and ensuring that the Group remains aligned with the evolving sustainability landscape.
Determining and Overseeing Sustainability Factors – The Board has a decisive role in identifying the ‘Sustainability Factors’ — these are the critical areas where the Group needs to focus its sustainability efforts. Once these factors are determined, the Board continues to actively oversee the management and monitoring of these factors to ensure that the set objectives are being met.
Institutionalising Sustainability through Policy – To ensure a systematic approach towards sustainability, the Board has established a Sustainability Policy (SR Policy). This policy provides a roadmap for the Group, detailing sustainability strategies, reporting structures, materiality assessment, and the processes for identifying and monitoring the Sustainability Factors.
What internationally recognised accreditations did GSS Energy attain in the previous year and can you elaborate more about it?
GSS Energy attained the following internationally recognised accreditations in the previous year:
- ISO 9001:2015 – This certification specifies requirements for a quality management system. It emphasizes the need for organisations to consistently provide products and services that meet customer expectations and adhere to applicable statutory and regulatory requirements.
- ISO 13485:2016 – This certification focuses on quality management systems specifically for the medical devices sector. It signifies that an organization has the capability to provide medical devices and related services that consistently comply with customer and regulatory requirements.
- IATF 16949:2016 – This the International Standard for Automotive Quality Management Systems. This accreditation underscores the emphasis on a process-oriented quality management system that aims for continual improvement. It focuses on defect prevention, reduction of variation and waste in the supply chain, ensuring that customer requirements from the automotive sector are met efficiently and effectively.
Editor’s Note: Some answers for this article were extracted from the SGX 5 in 5 series published on 28 November 2023 and have been republished with permission. You can read more on GSS Energy (SGX:41F) on the SGX website.
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